Friday, July 20, 2007

Longtime contributor Chuck D. recently sent in a thoughtful analysis on the interplay between food supply, development, soil and oil:

"I don't know how far out you have planned this week's theme, but you might want to consider doing a segment on the insanity of our food supply system. For example, how insane is it that we:

1. Have a food chain system that in the age of peak oil financially subsidizes agricorp busnesses over encouraging the small farmer, uses high energy production and dellivery techniques (read: oil based -- fertilizers, farming equipment, food processing and delivery systems) to supply us with 3000 mile Ceasar salads?

2. Distorts the market mechanism for grain by creating an artificial demand for corn to produce ethanol. This has a number of side effects. Anything that uses corn in food production becomes more expensive, and with the ubiquitous use of high-fructose corn syrup this includes a lot of what we eat. In addition, because we now have to divert wheat to feed cattle and pigs it goes up in price, and so does our bread and pasta. And we may go through our last 6 inches of topsoil in the Midwest to do it. All so we can make a product that is at best a break-even item in terms of input of energy units required to produce it versus energy units produced by it, and, ahem... well, maybe buy some votes with this policy?

3. Find it cheaper to import basic food necessities such as wheat gluten from China instead of making it ourselves so our bread isn't hard as a rock, and then surprise, surprise... we find out it's tainted with pesticide because China doesn't have the same quality control standards we do which run up the production costs supposedly in the name of safety?

4. Have developed out of existence much of the farm land that sat close at hand outside of cities, and which traditionally supplied the people in those cities with their food. In an age of cheap gas and happy motoring, no one cared and there was too much money to be made. But in an age of peak oil it may be different. Worse, if it is different, we have both stripped away the topsoil and compacted the ground for this development. If/when the suburban model fails, we simply can't get rid of the now useless development and put it back into farming. We may end up with wasted, useless land we can't do anything with at the same time we have people going hungry in nearby cities with no way to feed them. "

Thank you, Chuck D., for these insightful comments.

Another reader earlier this year described the same issue, that soil is a resource which cannot be scraped away, covered in compressed gravel and concrete, then exposed to air and expected to grow anything useful. Like air and water, soil is a resource which a market economy cannot value correctly. I have covered this before and recommended The Tragedy of the Commons, the seminal paper by Garrett Hardin which described the failure of the market to value/price common essential assets, i.e. "the commons."

The coming shortage of oil--i.e. the gap between the limited supply and insatiable global demand--is addressed by two Wall Street Journal articles, one in April and another in July, which was sent in by frequent contributor Michael Goodfellow. (Note that an online subscription is required to read the WSJ archives, but you can read the 7/16/07 story in a library.)

The International Energy Agency warned Thursday that output by the Organization of Petroleum Exporting Countries had hit its lowest level in over two years on production outages and self-imposed cuts, a factor likely to drain global oil stocks in the coming months.

In its monthly oil market report, the agency, the energy security watchdog for the Organization for Economic Cooperation and Development, highlighted unexpected product-led reductions in world oil stocks and what it described as "astonishing" demand growth in China, where it was forced to revise up its growth expectations for this year.

"It is a hard truth that the global supply of oil and natural gas from the conventional sources relied upon historically is unlikely to meet projected 50% to 60% growth in demand over the next 25 years," says the draft report, titled "Facing the Hard Truths About Energy."

"In geoeconomic terms, the biggest impact will come from increasing demand for oil and natural gas from developing countries," said the draft report, a copy of which was reviewed by The Wall Street Journal. "This demand may outpace timely development of new supply sources, thereby pressuring prices to rise."

The study, which was requested by U.S. Energy Secretary Samuel Bodman in October 2005, was conducted by the National Petroleum Council, an industry group that advises the secretary.

The conclusions appear to be the first explicit concession by the petroleum industry that it alone can't meet burgeoning global demand for oil, which may rise to as much as 120 million barrels a day by 2030 from about 84 million barrels a day currently, according to some projections.

My own study of the subject (admittedly an amateur's research) suggests petroleum output is maxed out at 85 million barrels a day. New supply only replaces what is being lost in declining supergiant fields. The idea that the earth can produce 120 million barrels a day of petroleum is pure fantasy, on the level of hoping the Martians arrive bringing a techno-miracle to save the day.

The only solution is to use the planet's remaining petroleum much more wisely and efficiently than we do now.

Michael also recently sent in this piece on a technology which would use much less oil--an example of many alternative technologies which are under development that could radically cut petroleum demand:

For a darker view of the slide down the slippery slope of Peak Oil, I highly recommend glancing at Life After the Oil Crash. You may find it far-fetched, as it refuses to concede technological fixes will actually enable the current global industrial and transportation complex to continue on more or less "as is." This is definitely worth reading, just to spark your own thinking on the long-term consequences of Peak Oil.

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